The Australian Taxation Office (ATO) recently announced that businesses will no longer be able to claim tax deductions for ATO interest charges from 1 July 2025. This applies to the General Interest Charge (GIC) and Short Fall Interest Charge (SIC).
So, what does this mean? GIC or SIC starting on or after 1 July 2025 will no longer be tax-deductible, regardless of whether it relates to an earlier income year.
With the end of financial year looming, below is a list of actions you can take before 30 June to help you prepare for the changes:
- Pay interest sooner rather than later – If you have an ATO debt, paying out the debt amount in full and as soon as it is due will reduce the amount of interest you’ll need to pay. If you can’t pay it in full, you can set up a payment plan but it’s best this is set to be paid off at the shortest possible time frame so you still receive the decreased interest charge.
- Talk to your accountant – If you’re unsure about the changes, seek advice from your accountant to get tailored advice to suit your circumstances.
- Mark it on your calendars – Mark important key tax dates in your calendars to keep on top of your tax obligations and to avoid any tax debts from being missed.
- Plan your finances – Consider reviewing your budget and cash flow and set aside extra funds ready for when payments are due to be next paid.
Now is a good time to chat to our office about the changes and how they could impact your tax situation.
To read about the changes, visit the ATO website: https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/deny-deductions-for-ato-interest-charges